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Client Alert

Is Corporate Bankruptcy an Option for Tribal Casinos?
Authors: Blaine I. Green, Craig A. Barbarosh, Mark Houle, Daron T. Carreiro

Tribal economies are not immune to the recent global financial crisis and economic downturn. The Indian gaming industry was hit especially hard. After consistent year-over-year growth in tribal gaming revenues during the 1990s and continuing through 2008, industry revenues declined in 2009 and have continued to stagnate. Amid reports of several tribal casino defaults—and many more tribes with significant debt maturing in the near future that will need to be restructured—tribes and creditors must consider two questions: Are tribes and their corporations eligible for bankruptcy? If so, is bankruptcy an attractive option for a tribal casino?

A number of recent articles conclude (or assume without discussion) that bankruptcy is unavailable for tribes and their gaming businesses. See e.g., Steven T. Waterman, "Tribal Troubles—Without Bankruptcy Relief," XXVIII ABI Journal 10, 44-45, 87 (January 2010); Shmuel Vasser and Janet Bollinger, "Casino Creditors, Heads-Up: American Indian tribes may be ineligible for bankruptcy," New York Law Journal, Dec. 13, 2010. See also Anthony S. Broadman, “Indian Self-Governance and Bankruptcy: The Case for Tribal Law,” Casino Enterprise Management, Feb. 1, 2011 (citing Waterman's conclusion that tribes are ineligible for bankruptcy relief).

However, this conclusion is far from certain. Indeed, a reasonable case can be made that tribal corporations are in fact eligible for bankruptcy. And, in the context of a tribal casino, bankruptcy may be an attractive option for tribes to restructure their looming debts—but much less attractive for creditors.

To read this publication in its entirety, please click the link in the adjacent "Download" section.
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